Microsoft to invest US$1.5 billion in UAE AI firm G42

Microsoft Corp is to invest US$1.5 billion in the top artificial intelligence (AI) firm in the United Arab Emirates (UAE), G42, bolstering the Abu Dhabibased company’s commitment to scale back its presence in China.

As part of the accord, Microsoft president Brad Smith is to join G42’s board and G42 would use the US software maker’s Azure cloud for its AI applications.

The agreement, an expansion of an existing partnership between the two companies, was developed in consultation with the UAE and US governments, Smith and G42 chief executive officer Peng Xiao (肖鵬) said in an interview.

“Microsoft got strong encouragement from the US government to move forward in this process,” Smith said. “That reflects a recognition by the US government of the importance of the relationship between the two countries, and the importance of continuing to encourage responsible companies like G42 and Microsoft really be at the forefront, not only of the technology itself, but of worldleading security and safety and responsible AI standards.”

G42, which has been a leader in the UAE’s push into AI, has businesses spanning everything from cloud computing to driverless vehicles. It is part of the US$1.5 trillion empire of UAE National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan.

The investment gives Microsoft a minority stake in G42, said Xiao, who declined to disclose financial terms or say how much G42 would spend on Microsoft’s cloud services.

Redmond, Washington-based Microsoft and G42 would also set up a US$1 billion fund for developers.

In a later stage of the deal, Microsoft is to host some of its own applications in G42’s data centers and use the relationship as a way to reach customers in Africa and central Asia, Smith said.

“There are markets today where Microsoft and really no American technology company has a real data center presence,” he said. “This is the kind of partnership that can really bring the cloud and AI to the global south probably a decade faster than would otherwise be the case.”

The investment agreement, signed when Smith visited Abu Dhabi earlier this month, is the product of a year of talks that included coordination with government officials in both nations.

Xiao in an interview in February said that the company would reduce its presence in China, and pledged to invest in key Western markets.

That came after a key US lawmaker urged the US Department of Commerce to consider trade restrictions on the firm over its ties to Beijing, following allegations made in a New York Times article.

G42 denied the report, and said the company has “pursued a commercial strategy since 2022 to fully align with our US partners and not to engage with Chinese companies.”